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Business Combinations under Common Control


EFRAG proactive work

A working group was set-up by EFRAG in co-operation with the OIC (Organismo Italiano di Contabilita - Italian Standard Setter) in order to develop a discussion paper to stimulate debate at an early stage in the standard setting process. 

Business combinations under common control (BCUCC) are excluded from the scope of IFRS 3 Business Combinations and the lack of authoritative accounting guidance has created diversity in financial reporting practice. 

The Discussion Paper Accounting for Business Combinations under Common Control (the DP) represented EFRAG's and the OIC's first step in their BCUCC project. The scope of the DP was limited to BCUCC in the consolidated financial statements of the acquirer. The DP was issued in October 2011, with a comment deadline 30 April 2012. The DP is available here:


Comment letters were received from respondents within and outside Europe, which demonstrated the importance of, and interest in, this initiative. 

In addition, EFRAG together with a number of National Standard Setters, organised four outreach events in Europe. The consolidated feedback on those events can be found here:  


After considering the comments received on the DP, EFRAG and the OIC issued in December 2012 a feedback statement on the DP presenting the analysis of comment letters received, together with EFRAG's and the OIC's responses to the issues raised by respondents. The feedback on the comments is available here:​ 

Feedback Statement on the DP 'Accounting for Business Combinations under Common Control'.pdf

EFRAG and the OIC agreed in October 2012 that further work in their overall project on the accounting for BCUCC transactions would encompass the following:

(a) Review real-life examples to see whether they provided a basis for categorising BCUCC transactions into different types, for which different accounting treatments should apply. If this was successful, indicators of the difference in economic substance could eventually be drawn from the exercise; and
(b) Define what a business combination under common control is. 

Subsequent EFRAG developments of the BCUCC project

Proposals for a definition of BCUCC

In June 2013, EFRAG staff presented an agenda paper on a proposal for a definition of BCUCC. Although it was acknowledged that there were some merits in the EFRAG staff's proposals, the EFRAG TEG members were concerned that any change in the current wording could result in unintended consequences. In subsequent discussions held in November 2013 some EFRAG TEG members believed that any proposals for a definition of BCUCC should be tested against real-life examples. 

EFRAG TEG concluded that that no further proactive effort was required and advised to continue actively minitoring the IASB activities.


IASB research project

In December 2007, the IASB decided to add the BCUCC project to its agenda. In 2009, the project  was put on hold because of the changed priorities of the IASB. In 2011-12 IASB Agenda Consultation, BCUCC were identified as a high priority project by most respondents, including users.

In June 2014, the IASB tentatively decided that the project should consider:

(a) business combinations under common control that are currently excluded from the scope of IFRS 3 Business Combinations;
(b) group restructurings; and
(c) the need to clarify the description of business combinations under common control, including the meaning of common control.
The IASB also tentatively decided to give priority to considering transactions that involve third parties, for example those undertaken in preparation for an initial public offering.  

During 2014-2016, the IASB staff conducted a number of research and outreach activities to better understand the current practice to account for BCUCC.

In September 2017, the IASB restarted its discussions on the BCUCC project with an education session on the current status of the project. In December, the IASB staff is planning to discuss the scope of the project and the potential methods to account for BCUCC with the Accounting Standards Advisory Forum.

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